Most small owner-operated businesses in New Zealand sell for a low single-digit multiple of their adjusted earnings. Within that, the spread between industries, and between businesses in the same industry, is wide.
What the multiple is applied to
The same business can show very different multiples depending on which earnings figure sits underneath. That trips a lot of owners up.
EBPITDA is earnings before proprietor's wages, interest, tax, depreciation and amortisation. It's the standard for owner-operated businesses, where the buyer will step in and work the business. Multiples on EBPITDA are lower, because part of what the buyer receives is effectively their own wage.
EBITDA treats a market wage for the owner or manager as a cost. It's used for larger businesses with management in place. Multiples on EBITDA are higher, because the earnings are a return on investment rather than a wage.
So when someone quotes "four times earnings", ask which earnings. A business on 2.5 times EBPITDA and one on 4 times EBITDA can be priced almost identically.
Revenue multiples are a separate case, used mainly for software and subscription businesses. They don't translate across to profit-based multiples at all.
What pushes a multiple up
- Contracted or recurring revenue, such as maintenance agreements, managed services or a regular service round
- A manager or senior staff who can run the business without the owner
- A long lease with rights of renewal, or freehold available
- A wide customer base with no single client dominating
- Three or more years of steady or growing profit
- Clean records that reconcile with GST returns
What pulls it down
Owner dependence does the most damage. If the owner is the key salesperson, the main technician and the only person customers trust, a buyer is paying for something that leaves at settlement.
A short lease runs a close second, because a buyer's bank will often lend over the term remaining and no further. Declining profit, a single customer worth a large share of revenue, and tired equipment needing replacement all push the multiple down too.
Multiples by industry: what buyers focus on
We don't publish one fixed multiple per industry. Two businesses in the same sector can sit at opposite ends of the range, and a single figure would mislead more owners than it helped. Here's what drives pricing across common NZ sectors.
| Industry | How it's usually priced | What buyers pay up for | What drags it down |
|---|---|---|---|
| Cafés and restaurants | EBPITDA multiple, often at the lower end | Long lease, strong repeat trade, a manager in place | Short lease, owner on the coffee machine six days a week |
| Childcare and early learning | EBITDA or EBPITDA multiple, often higher than general retail | High occupancy, licensed places, stable qualified staff | Low occupancy, staff turnover, compliance issues |
| Accounting and professional practices | Often a multiple of recurring fees | Recurring compliance clients, staff who stay on | Clients loyal to the retiring principal |
| Trades businesses | EBPITDA multiple | Commercial contracts, crews that run without the owner | Owner quoting, pricing and doing the work |
| Lawn mowing and service rounds | Often against regular weekly income | Regular, well-spread customers, tidy gear | Irregular jobs, worn equipment |
| Laundromats | EBPITDA multiple | Low labour, modern machines, long lease | Ageing machines, short lease |
| Liquor stores | EBPITDA multiple, with stock added | Lease security, good location, steady margins | Licence or lease uncertainty |
| Motels | Leasehold and freehold priced differently | Long lease term, strong occupancy | Short lease remaining, rent reviews |
| IT companies and MSPs | EBITDA multiple, often higher | Contracted monthly recurring revenue | Project work with no ongoing contracts |
| SaaS and software | Often a revenue or ARR multiple | Low churn, strong growth, good margins | High churn, founder holding the code |
| E-commerce | EBPITDA or EBITDA multiple | Diverse traffic, repeat buyers, own brand | Reliance on one platform or one ad channel |
| Franchise resales | EBPITDA multiple | Plenty of term left, strong franchisor support | Short remaining term, renewal costs |
A worked example
Two Auckland trades businesses each earn $200,000 EBPITDA.
The first is an electrical contractor with three commercial maintenance contracts, a foreman who runs the crews and a well-maintained fleet of vans. The second relies on the owner to quote every job, and most of its work is one-off residential callouts.
A buyer sees steady, transferable income in the first. In the second, they see a job that leaves with the owner. Same earnings, very different multiple, and the gap between the two prices could easily run to six figures. (Illustrative only.)
How to find the right multiple for your business
Rules of thumb and online averages only get you so far. The most reliable evidence is what similar businesses sold for recently, adjusted for the differences between them and yours.
Under the Real Estate Agents Act rules, a licensed broker's appraisal must be backed by comparable sales and reflect current market conditions. That's what our free business appraisal gives you: the multiple that fits your business, with the evidence behind it.
For a quick starting point, the business valuation calculator applies a typical industry band to your figures. And if you want to see how multiples sit alongside other approaches, compare the main business valuation methods used in NZ.
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Multiples questions
What is a good EBITDA multiple for a small business in NZ?
There isn't one figure. Most small owner-operated businesses sell for a low single-digit multiple of adjusted earnings. Larger businesses with management in place and recurring revenue sit higher.
Why is my multiple lower than the one I read about overseas?
Overseas figures often refer to larger companies valued on EBITDA, sold to corporate or private equity buyers. NZ small business sales are mostly owner-operated businesses sold to individual buyers, priced on EBPITDA.
Can I raise my multiple before selling?
Usually, yes, given time. Reducing your own involvement, securing the lease and converting one-off work into contracts all help. Most of these take a year or more to show up in the numbers.